TRW Reports First Quarter 2009 Financial Results


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LIVONIA, Mich., May 6, 2009: TRW Automotive Holdings Corp. , the global leader in active and passive safety systems, today reported first-quarter 2009 financial results, which reflect the unprecedented decline in global vehicle production during the quarter. The Company reported sales of $2.4 billion, a decrease of 42.3 percent compared to the prior year and a GAAP first quarter net loss of $131 million or ($1.30) per diluted share, which compares to net earnings of $94 million or $0.92 per diluted share in the prior year period.

The 2009 first quarter GAAP net loss includes restructuring and fixed asset impairment charges of $24 million, a one-time charge of $30 million for the impairment of trademarks and a one-time gain on retirement of debt totaling $34 million. The prior year first quarter included restructuring charges and asset impairments totaling $8 million. Excluding these special items, TRW's 2009 first-quarter net loss was $115 million, or ($1.14) per diluted share, which compares to net earnings of $102 million or $1.00 per diluted share in the prior year period, reflecting the impact of the $1.8 billion decline in sales between the two quarters.

"The automotive industry continues to face extraordinary challenges resulting from the global economic crisis and significantly reduced automotive production levels, the effects of which are reflected in our first quarter results announced today," said John C. Plant, President and Chief Executive Officer. "TRW continues to take decisive actions to mitigate those challenges, focused on aligning our business with the current industry conditions, while ensuring the strength of our industry leading technology positions."

First Quarter 2009

The Company reported first-quarter 2009 sales of $2.4 billion, a decrease of $1.8 billion or 42.3 percent from the prior year period. The 2009 quarter was adversely impacted by lower sales in all geographic regions resulting from sharply reduced vehicle production volumes. Currency movements during the quarter also had a negative impact on sales compared to the same period a year ago.

Included in the first quarter 2009 results were restructuring and fixed asset impairment charges totaling $24 million and a one-time trademark impairment charge of $30 million. The 2008 period included restructuring and asset impairment charges totaling $8 million. Excluding these charges from both periods, operating income for the first quarter of 2009 was a loss of $71 million, which compares to income of $196 million in the prior year period. The year-to-year decrease was driven primarily by the profit impact of the $1.8 billion in lower sales.

Net interest and securitization expense for the first quarter of 2009 totaled $42 million, which compares favorably to $49 million in the prior year due to lower interest rates. In addition, a gain on retirement of debt of $34 million was recognized in the first quarter of 2009.

For the 2009 quarter, a tax benefit totaling $5 million was reported, which compares to a tax expense of $47 million in the prior year period. Of the benefit included in the current year period, $4 million related to the special items previously mentioned.

The Company reported a 2009 first-quarter GAAP net loss of $131 million, or ($1.30) per diluted share, which compares to GAAP net earnings of $94 million, or $0.92 per diluted share in the 2008 period.

Excluding the special items referred to above, the Company reported a first-quarter 2009 net loss of $115 million, or ($1.14) per diluted share, which compares to net earnings of $102 million or $1.00 per diluted share in the 2008 period.

Earnings before interest, securitization costs, taxes, depreciation and amortization and special items ("adjusted EBITDA") were $43 million in the first quarter of 2009, compared to the prior year level of $345 million. See page A5 for a description of the special items excluded in calculating adjusted EBITDA.

Cash Flow and Capital Structure

First quarter 2009 net cash flow from operating activities was a use of $254 million, which compares to a use of $115 million in the same period last year. First quarter 2009 capital expenditures were $35 million compared to $97 million in 2008. First quarter net cash flow used in operating activities less capital expenditures was $289 million compared to $212 million in the prior year.

As of April 3, 2009, the Company had $2,958 million of debt and $535 million of cash and marketable securities, resulting in net debt (defined as debt less cash and marketable securities) of $2,423 million. This net debt outcome is $176 million lower than the balance at the end of the prior year first quarter.

Committed liquidity facilities and cash on hand provided the Company with available liquidity in excess of $1.5 billion as of April 3, 2009. Amid continuing concerns about ongoing disruptions in the financial markets and uncertainty in the automotive industry, on April 7, 2009, the Company drew down additional funds under its $1.4 billion revolving credit facility (bringing the total utilization to $1.3 billion).

2009 Outlook

TRW currently expects full year production to total 8.2 million units in North America and 15.9 million units in Europe. Based on these revised production levels and the Company's expectations for foreign currency exchange rates, full-year sales are now expected to range between $10.1 billion and $10.5 billion, with second quarter sales expected to be approximately $2.5 billion. In response to the continued negative economic and automotive industry conditions, the Company now expects its cash restructuring expense to total approximately $90 million for 2009.

"As expected, 2009 is shaping up to be another challenging year for the automotive industry. We remain on track with our restructuring plans and are cautiously optimistic that the stimulus and scrappage programs implemented around the world will lead to moderately higher vehicle production levels in the second half of the year," said Mr. Plant. "Preserving our liquidity and taking swift, decisive actions to help mitigate the effects of the downturn remain our top priorities in 2009."

First Quarter 2009 Conference Call

The Company will host its first-quarter conference call at 8:30 a.m. (Eastern time) today, Wednesday, May 6th, to discuss financial results and other related matters. To participate in the conference call, please dial (877) 852-7898 for U.S. locations, or (706) 634-1095 for international locations.

An audio replay of the conference call will be available approximately two hours after the conclusion of the call and will be accessible afterward for approximately one week. To access the replay, U.S. locations should dial (800) 642-1687, and locations outside the U.S. should dial (706) 645-9291. The replay code is 95189434. A live audio webcast and replay of the conference call will also be available on the Company's website at TRW.

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